How to reduce your strata levies

With the cost-of-living pressures mounting, it is little wonder this is a question that many strata owners across Australia are asking.

At least one in five Australians live in strata complexes, including apartments and townhouses. That’s around 5 million people. And with PropTrack data showing unit prices remain substantially more affordable than house prices, it’s conceivable that the population of people living in strata will continue to increase.

Prudent strata managers and committees know that responsible fiscal management is the foundation of a well-functioning Owners Corporation. This leads to a better standard of living for residents, higher values, higher rent returns, and easier saleability. There are simple and effective ways to make your Strata Levy Dollar stretch further.

According to PropTrack, levies costs are one cost, unit owners can often overlook.

Here are five tips to get you started:

TOP FIVE TIPS TO REDUCE YOUR STRATA LEVIES

1. Pay attention to your insurance

Insurance is often the single largest line item in many Owners Corporations’ budgets, but few owners understand what is insured and how their scheme is assessed for risk. By understanding your risk profile, your scheme can mitigate these risks which will ultimately lead to fewer claims and reduce increases to your premium. Having adequate and appropriate cover is also essential. Appliances such as lifts or air- conditioning systems may not be covered by standard building insurance. Should a major incident occur, owners may be forced to raise special levies to cover the difference.

Finally, explore the option of self-insurance. Opting for a higher excess on your policy or specific exclusions from your policy can save thousands on your premium

MORE: Sydney leading Australia’s home price recovery, according to PropTrack

2. Sustain and save

With the push for net zero, there is an abundance of government rebates and sustainability incentive schemes on offer – both at a local and state level – that are designed to improve your building’s infrastructure and put money back into strata owners’; pockets. These include but are not limited to:

– LED Lighting Upgrades (available in all states)

– Solar Installations and Battery Charging Incentives (available in all states)

– EV Charging installation subsidies (available in most states)

– Waste Management and Recycling programs

– City of Sydney – Clean Green apartments

– The Sydney Water Fix Program (available in greater Sydney)

– Brisbane City Council – Green Buildings Incentive Policy

– City of Melbourne – Sustainable Apartments program

– City of Perth – Sustainable Building Grants & Smart Cities program

– City of Adelaide – Sustainability Incentives Scheme

The best thing about these initiatives is that once they are implemented, they will save your

scheme thousands for decades to come.

3. Know thy infrastructure

Preventative maintenance programs are essential, not only to maintain infrastructure but to prolong the life of critical plants and equipment, and ensure they are operating at maximum efficiency. Maintenance programs will also lead to fewer breakdowns, less inconvenience for residents, and cost savings for owners. Where possible, schedule appliances to operate during ‘off peak’ times and convert lighting systems to motion sensors to conserve power. This will shave hundreds, possibly thousands, off your yearly common electricity bills.

4. Harness the power of by-laws

Many of the administrative costs that are incurred by Owners Corporations can be charged back to lot owners when an appropriate administrative by-law has been adopted. Recent NSW Civil and Administrative Tribunal (NCAT) decisions have affirmed the use of these by- laws, however, it is important that the terms and conditions are fair and reasonable. If you are considering adopting these types of by-laws for your scheme, you should seek advice from a specialist strata lawyer. Once adopted, they can provide an ongoing cost-saving mechanism.

MORE: Kyly Clarke’s rental woes revealed

Edwina Bartholomew’s new house setback

Beyoncé, Jay-Z buy $300m mansion in cash

5. Stop paying a ‘lazy tax’

Regularly review your contracts, particularly with utility, maintenance, and service providers. It is not always about reducing fees charged or changing service providers, but negotiating additional services or fixing fees so your scheme is able to plan and budget with more certainty. When you are negotiating a new contract, bulk tendering (i.e. engaging in group buying power to gain the maximum benefits) is another emerging practice being employed by many Owners Corporations to save on electricity, lift agreements, and other service contracts. Whether your scheme is two lots or 2000 lots, a bulk tendering broker can align the needs of your scheme with those with similar interests to gain the maximum benefit.

* Stephen Brell is President of Strata Community Association (NSW)

Originally published as How to reduce your strata levies